Nuclear factor-kappa B (NFkB) is a major transcription factor which regulates the expression of pro-inflammatory mediators and cytokines. The activation of NFkB plays a critical role in the initiation and development of inflammatory bone diseases such as rheumatoid arthritis, osteoarthritis, periodontitis and osteoporosis. It has long been known that inflammatory mediators such as tumor necrosis factor (TNF) and interleukin-1 (IL-1) inhibit bone formation and impair osteoblastic functions in addition to promoting bone resorption. Although significant progress has been made in the understanding of osteoclast-mediated bone resorption, little is known about how inflammatory mediators exhibit their mode of action in bone formation. In this application, we hypothesize that NFkB, in addition to its immune function, plays a critical role in the inhibition of osteoblast function and bone formation in inflammatory bone diseases. To test our hypothesis, we established a mesenchymal cell model in which osteogenic differentiation could be inhibited by TNF. Using this model, we found that the inhibition of NFkB enhanced osteogenic differentiation induced by bone morphogenetic proteins (BMPs) in vitro. To validate our findings in vivo, we generated two strains of transgenic mice which specifically expressed the NFkB inhibitor in osteoblasts. Our preliminary studies found that the inhibition of NFkB increased bone formation in vivo. To fully understand the molecular mechanisms by which inflammatory mediators inhibit bone formation, we propose the following three aims. Aim 1 is to examine whether the inhibition of endogenous NFkB activities affects osteogenic differentiation and determine whether NFkB plays a critical role in the TNF/IL-1 inhibition of osteogenic differentiation in vitro. Aim 2 is to determine whether NFkB negatively regulates postnatal bone formation in vivo by inhibiting osteoblast functions. Aim 3 is to explore whether the inhibition of NFkB in osteoblasts prohibits bone loss induced by osteoporosis and inflammatory cytokines in vivo. Aim 4 is to explore how NFkB inhibits osteoblast function and bone formation. These in vitro and in vivo approaches will provide new insights into the molecular regulation of osteoblast differentiation and bone formation. Additionally, in the realm of bone tissue regeneration, the defected or injured tissues may be inflamed with an abnormal expression of inflammatory mediators. Thus, to obtain successful bone regeneration, it is important to overcome the inflammation-mediated inhibition of osteoblast differentiation. Taken together, novel results from our studies may have important implications in developing new strategies to inhibit and prevent bone loss caused by inflammatory mediators in a variety of human bone disorders.